Use the Following Information for the Next 2 Questions

question 126

Multiple Choice

Use the following information for the next 2 questions.
Division A produces a component for Hielkema Company's main product - automobiles. The division operates as a profit center. It also sells to outsiders. The present selling price is $75 per component. The company buys 600,000 units of a similar component per year from outside sources. The external purchase price is $73 as a result of a quantity discount. Division A has adequate capacity to supply the needs of the Assembly division. The following data are for Division A:
-The minimum price at which A would sell components internally is

• A) $71
• B) $73
• C) $75
• D) $65

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Definitions:

Control Accounts

General ledger accounts that consolidate and summarize the detailed information from subsidiary ledgers.

Subsidiary Accounts

Detailed accounts linked to a general ledger account that record individual transactions related to that ledger's balance.

General Ledger Control Accounts

Accounts used to summarize the total balances of several subsidiary accounts, facilitating the reconciliation and reporting process.

Subsidiary Ledgers

Detailed ledgers that contain information supporting accounts listed in the general ledger, such as details on accounts receivable, accounts payable, etc.